Just read an interesting article and found something noteworthy to pass along:

Recently, BYD was touted in an investment newsletter. What I found interesting was (supposedly) their big advantage is the cheap human labor component:

"The big innovation from BYD was not in some radical redesign of the battery...but in using people instead of robots, taking advantage of what remains, at least for now, China’s largest resource: cheap labor. The big Japanese manufacturing robots were too expensive, so Wang figured out how to re-engineer the battery manufacturing process to use migrant workers instead of robots in order to cut costs, and became a major supplier to cell phone, laptop and other manufacturers."

http://www.stockgumshoe.com/2009/11/what...

Juxtapose that with this quote from Mao Huanyu's (then CBAK CTO, now GM of the Tianjin facility) speech at the China Energy Conference last May:

"I think we need to get rid of the hand making method and go for full automation for conformity. There are over 20 tech specs and many production procedures in LiFeFO4 battery making. Batteries need to go through all specs and procedures with conformity, for long life cycle purpose. Automation in production is necessary therefore, unlike mobile phone batteries where a single cell will do the job."

Remember, some of these EV battery packs are comprised of 5K to over 10K LiFeFO4 batteries. If they don’t conform with one another, you get bad headlines like several manufacturers found out the hard way. That fact could very well be CBAK's key competitive advantage longer term against a much larger company like a BYD.

As of last May, CBAK had 16 coating machines purchased for $1.5M each along with 71 winding machines at $350K each in their fully automated production line. That alone represents a $50M investment for just 2 steps in a 20 step production process. This was before they made further purchases to expand capacity over the summer. Last month, the Chinese government put their seal of approval on the Tianjin facility for meeting their standardized guidelines.

What the naysayers point to is CBAK’s debt and TTM numbers. To me, that lacks vision and is driving while looking in the rearview mirror. What I see is a company that is investing in its future by building up the infrastructure and production capacity that will be the engine to drive the companies’ future revenues, earnings and growth.